Japan's EPA cuts economic outlook

MarikoAndo

TOKYO (CBS.MW) -- Japan's Economic Planning Agency on Friday downgraded its assessment of the economy for the first time in more than 2 years in its November report.

A slowdown in exports and renewed drop in prices are capping growth in the economy, warned the EPA, which lowered its economic assessment for the first time since September 1998.

"While exports to Asian nations remain firm, those to Europe and the U.S. stay flat. As a result, overall export growth is slowing," said EPA. "While there are some companies which are starting to see a drastic recovery in their profits, consumer consumption and the employment situation are still lagging."

But the agency did not change its view that the economy was gradually recovering.

"We haven't changed our view that the economy as a whole is on a recovery track," said EPA chief Taichi Sakaiya. " This report just features a slightly increased sense of caution in view of a slowdown in the pace of recovery."

Meanwhile, the EPA slightly raised its assessment for investment in plant and equipment in its November report.

The news, however, failed to sway the country's financial markets. The dollar was trading recently at 107.57 yen late Friday in Tokyo against 107.64 yen early in the morning. In the stock market, the Nikkei Average closed down 0.47 percent, or 71.51 points, at 14,988.54 points.

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